Lesson-10-Product-and-Brand-Decisions.ppt

branding

1. Lesson 10
Product and
Brand Decisions
10-1

2. Basic Product Concepts
A product is a good, service, or idea
◦Tangible Attributes
◦Intangible Attributes
Product classification
◦By buyer (consumer, industrial)
◦By amount of effort put into purchase (low involvement,
high involvement)
◦By durability (durables and non-durables)
◦By buying motivations (thinking and feeling)
◦By buyer orientation (convenience, preference, shopping,
specialty goods)
10-2

3. Product Types
Buyer orientation
◦Amount of effort expended on purchase
◦Risk level associated with purchase
◦Buyer involvement
◦Convenience
◦Preference
◦Shopping
◦Specialty
10-3

4. The Power of Brands
Rank Brand bn. $ 2003
1 Coca Cola 70.45
2 Microsoft 65.17
3 IBM 51.77
4 GE 42.34
5 Intel 31.11
Source: Interbrand
Useful Article
https://www.investopedia.com/articles/financial-theory/11/branding-
ultimate-economic-moat.asp
10-4

5. The most powerful brands in
Britain (in pictures), 2018
http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/
9029985/The-most-powerful-brands-in-Britain-in-pictures.html
© 2005 Prentice Hall 10-5

6. Top 10 -The most powerful brands in
Britain (in pictures), 2017
http://uk.businessinsider.com/the-worlds-10-most-powerful-brands-
2017-2
© 2005 Prentice Hall 10-6

7. Put it in perspective
Greater than the 1995 GDP of Poland ($65.9 bn),
Algeria ($69.6 bn), Israel ($58.8 bn), Venezuela
($57.4 bn).
Gross value of Coca Cola company’s 2002 tangible
fixed assets –$9 bn.
Personal Income for 2002, for Charlotte-Gastonia-
Concord MSA -$46.51 bn –1.406 mill. people (BEA
–US Dept. of Commerce)
10-7

8. What does this value indicate
The amount you would have to pay if you wanted
to buy the brand (Bills Gates: $40.7 bn. in 2003)
The power to command future sales (Coke’s 2002
sales –$19.56 bn.)
The incredible skew in value placed on an
intangible asset (9 bn. Vs. 70.45 bn.)
Lastly, the strength and favorable attitude towards
the name in your minds (1985 –Coke’s
misadventure)
10-8

9. Origins of branding
Derived from old Norse word ‘brandr’ meaning ‘to
burn’
Marks on Chinese porcelain, pottery jars from
Greece and Rome and Indian artifacts dating from
1300 BC
Cattle Ranchers
Bakers to mark their bread -English law in 1266
The Moon & the Stars (1851) –P&G brand
Uneeda biscuits –1898 –first nationally branded
biscuit
10-9

10. Advantages
Can be sold prepackaged hence specific quality levels can be assured
Opportunity to communicate specific brand benefits
Opportunity to appeal to specific market segments
10-10

11. What is a brand
A differentiated product is a brand.e.g. Nike, Gap, Abercrombie & Fitch,
Levis, Citibank, Panthers, Coca Cola, etc.
A brand must satisfy two conditions
◦Distinctive identity (name, symbol, logo, slogan, etc.)
◦A distinctive image (e.g. Coke vs. Pepsi)
10-11

12. Why is branding important
Push vs. Pull
Financial value of brands in the context of mergers and acquisitions
(KKR paid $30 bn. for RJR Nabisco (Oreos, Newtons, Teddy Grahams,
Chips Ahoy, etc.) in 1989 –first M&A transaction to recognize value of
the brand name)
10-12

13. Why is branding important
Jump start sales across product categories e.g.
Hooters Airlines, Reebok bottled water
Ability to operate highly profitably on minimal fixed
investment (e.g. Sara Lee Corp. –Hanes, Ball Park,
Kiwi, Coach, etc. –is an “assetless” company –no
manufacturing operations. Also Baskin Robbins,
Sam Adams beer, Calvin Klein jeans and Motorola
cellphones)
10-13

14. Critical features of brands
Intangible
Exist at a perceptual level
◦Whether a brand has been created or not is determined by the consumer.
◦(manufacturers may invent the brand –name, advertising and positioning,
but if the consumer does not perceive the brand as such (i.e. a differentiated
product), a brand HAS NOT been created)
10-14

15. Types of brands
Consumer brands (most fall in this category) e.g. Nike, Gatorade,
Maytag, Pantene, Tyson chicken, Mercedes, etc.
Industrial brands e.g. Xerox, Caterpillar, Komatsu, Boeing, Airbus, etc.
Service Brands e.g. British Airways, Fedex, UPS, State Farm Insurance,
Citibank, etc.
10-15

16. Types of brands
Corporate Brands e.g. GE, Disney, Honeywell, etc.
Retail brands e.g. Gap, A&F, JC Penney, Albertsons, etc.
Person brands e.g. Cindy Crawford, Heidi Klum, Michael Jordan, Jennifer
Lopez, etc.
10-16

17. What are the brand’s benefits?
Functional level–does the product perform as it is supposed to
perform –primary benefits e.g.
Does Herbal Essences shampoo clean my hair, give
it shine, keep it untangled, protect against
dandruff, avoid split-ends, preserve hair color,
groom my hair, etc.
10-17

18. Exercise
What functional benefits do the following brands give
◦Nike shoes
◦Coca Cola
◦Crest toothpaste
10-18

19. Brand benefits
Emotional level–does using this brand
give me emotional satisfaction –
secondary benefits.
Does L’Oreal make me feel attractive?
Does Herbal Essences make me feel happy after use?
Do my Victorinox jeans make me look sexy?
10-19

20. Exercise
Think about a brand and identify its emotional benefits
10-20

21. Brand benefits
Self-expressive level–does using this
brand make me look good/desirable
amongst my peers –tertiary benefits.
Does driving a Corvette make me look “cool” and “hip” amongst my
friends?
Would my Porsche tell my friends that I am rich but discriminating in
taste?
10-21

22. Exercise
Think about a brand and identify its self-expressive benefits
10-22

23. Identify the brand with
country
News Corp (Fox
News)
Solvay
BP
GlaxoSmithKline
Sainsbury
Marks & Spencers
Shell
Phillips
Unilever
Prudential
10-23

24. Identify the brand with
country
Pemex
Heineken
Carlsberg
LG Electronics
Samsung
Volvo
Ericsson
Nestle
Novartis
ABB
DuPont
Gillette
Bombardier
Sinopec
10-24

25. Identify the brand with
country
Nokia
Danone
L’Oreal
Michelin
BMW
Chrysler
Lufthansa
LVMH
Fiat
Guinness
Bridgestone
Sharp
Canon
10-25

26. Local, International and Global
Brands
Local Brands
◦Sold only in a single national market e.g. Thums Up in
India
◦Entrenched local products/brands can be a significant
competitive hurdle to global companies (e.g. Thums Up
and Coke in India; Jollibee and McDonalds in Philippines,
Li Ning sneakers and Nike in China)
◦Foreign companies often create local brands (e.g. Ariel
detergent in India by P&G, Sokenbicha, a blended tea in
Japan by Coca Cola)
10-26

27. International Brands
International Brands
Offered in several markets in a particular region
◦‘Euro-brands’
◦e.g. Daimler Chrysler ‘Smart Car’
10-27

28. Global Brands
Global products meet the wants and needs of a global market and is
offered in all world regions
Global brands have the same name and similar image and positioning
throughout the world
E.g. BMW, Gillette, GE, etc.
10-28

29. Global Products and Brands
A multinational has operations in different
countries. A global company views the world as a
single country. We know Argentina and France are
different, but we treat them the same. We sell
them the same products, we use the same
production methods, we have the same corporate
policies. We even use the same advertising—in a
different language, of course.
-Alfred Zeien Former Gillette CEO
10-29

30. Key Question
When introducing a product in a foreign country, what are the factors
determining using the existing brand name versus a new brand name?
◦Cultural similarities in TA
◦Pre-existing knowledge and attitudes to existing name and its country of
origin
◦Legal issues
◦Cost and profitability considerations
10-30

31. Branding Strategies
Leveraging the power of the brand name to cover
the market more effectively
◦Brand associations
Why do we do it?
◦Phenomenally expensive to create and promote a new
brand name (at least 100 –150 million dollars)
◦Too many brands out there
◦Increase productivity of current marketing programs
10-31

32. Sub-branding
Creating new brands which are part of the parent brand family –
expressed as suffixes of the parent brand.
e.g Nike Air Jordan is a sub-brand of Nike which is the parent brand. Air
Trigo, Air Mohawk are sub-brands of Nike Air.
Pro V is a sub-brand of Pantene
10-32

33. Network of Brand Associations
© 2005 Prentice Hall 10-33
NIKE
Basket
ball
athletic
Michael
Jordan
Tiger
Woods
golf
Sweat
shops
running
Rain
Seattle

34. Flanker Brand
Different brand name –same product line
◦Purpose: Pre-empt competition, cover the market more completely (protect
your flanks)
◦Problem: some cannibalization is expected.
E.g. Thums Up and Coca Cola in India
Hallmark and Ambassador cards
10-34

35. Brand Extension
Same brand name, new product line e.g. Reebok
shoes and Reebok water. Nike shoes and Nike
casuals. Chevy cars and Chevy men’s cologne.
Hooters restaurants and Hooters airline
The concept of congruence determines the success
of a brand extension strategy. E.g. Johnson’s baby
powder and Johnson’s baby oil –high congruence.
But imagine Lysol toilet bowl cleaner and Lysol
toothpaste!!!
10-35

36. Ingredient branding
Branding an ingredient of the main brand, which is often manufactured
by a different company.
E.g. Intel Inside is an ingredient brand on IBM, Dell, Compaq, etc.
computers; Breyers Chocolate Ice Cream with Hershey’s pieces / M &
Ms; Breyers icecream with Splenda
10-36

37. Complementary / Co-branding
When two or more mutually reinforcing brands get together to jointly
promote themselves (one is not an ingredient of another).
E.g. co-branded credit cards like Chase MasterCard, OR Harley Davidson
and Ford Explorer.
10-37

38. Umbrella Branding
Brand acts as an umbrella for new products
◦Example: The Virgin Group
◦Virgin Entertainment: Virgin Mega-stores and MGM Cinemas
◦Virgin Trading: Virgin Cola and Virgin Vodka
◦Virgin Radio
◦Virgin Media Group: Virgin Publishing, Virgin Television, Virgin Net
◦Virgin Hotels
◦Virgin Travel Group: Virgin Atlantic Airways, Virgin Holidays
10-38

39. Developing a Global Brand
Questions to ask when management seeks to build a global brand:
◦Will anticipated scale economies materialize?
◦How difficult will it be to develop and coordinate a global brand team?
◦Can a single brand be imposed on all markets successfully?
10-39

40. Global Brand Development Process
Create a compelling value proposition –one that transcends all cultures
(e.g. Snickers –“a meal in a bar” or BMW –“the ultimate driving
machine”)
Think about all elements of brand identity and select names, marks, and
symbols that have the potential for globalization –are any banned,
already being used?)
10-40

41. Global Brand Development
Organize for a global brand team (communications, research, planning
processes, advertising agency, etc.)
Harmonize branding strategies (do you know the architecture of your
brands?)
10-41

42. Local versus Global Products and
Brands: A Needs-Based Approach
10-42
Physiological
Safety
Social
External/Internal
Esteem
Self-actualization

43. Country of Origin as Brand Element
Perceptions about and attitudes toward particular countries often
extend to products and brands known to originate in those countries
(“Made in-”)
◦Japan (miniaturization and high quality)
◦Germany (engineering)
◦France (chic)
◦Italy (style)
10-43

44. Extend, Adapt, Create: Strategic
Alternatives in Global Marketing
Extension –offering product virtually unchanged in markets outside of
home country
Adaptation –changing elements of design, function, and packaging
according to needs of different country markets
Creation –developing new products for the world market
10-44

45. Global Product Planning: Strategic
Alternatives
10-45
Product
Same Different
Communication
Different
Same
Strategy 1:
Dual Extension
e.g. industrial products
Strategy 2:
Product Extension
Communication
Adaptation
Strategy 4:
Dual Adaptation
Strategy 3:
Product Adaptation
Communication
Extension

46. Global Product Planning: Strategic
Alternatives
Strategy 1 –Dual Extension
◦Easiest, least expensive way
◦Used for products not rooted in cultures e.g. industrial products
Strategy 2 –P extend, C –adapt
◦Same product, change advertising
◦Ben & Jerry’s ice cream in UK changed its packaging colors
10-46

47. Global Product Planning: Strategic
Alternatives
Strategy 3 –P –adapt, C –extend
◦E.g. Exxon –changes its gasoline formulation to adhere to country
regulations and temperatures but keeps the same advertising
◦P&G markets Tide in India under a different brand name ‘Ariel’ –the product
is the same
Strategy 4 –Dual adaptation
◦Change product specs and advertising
10-47

48. Global Product Planning: Strategic
Alternatives
Strategy 5 –Invent
◦When adaptation can go only so far
◦Products for low income countries
◦E.g. Whirlpool new line of washing machines (Ideale) for Brazil, China and
India
10-48

49. What should you guard
against?
Two errors that management makes in choosing a strategy
◦NIH (Not invented here) syndrome means managers ignore the
advancements of subsidiaries overseas
◦Managers impose policies upon subsidiaries because they assume what is
right for customers in one market is right in every market
10-49

50. Identifying New Product Ideas
Continuous Innovations –faster PCs
Dynamically continuous innovations –Sensor Excel,
Mach 3 from Gillette
Discontinuous innovations –internet, CDs, etc.
10-50